Thursday, June 12, 2008

Thanks to unclear government policies, investors are showing reluctance to investment in the hydroelectricity sector.

No one has sent Request for Proposal (RFP) for building the storage-type 600 MW Budhi Gandaki Hydro Electricity Project, though the Department of Electricity Development (DoED) had invited the RFP for the project in January. The dateline for invitations has been extended two times. A total of 28 parties —18 Indian, 5 Nepali, 2 Chinese and one each from the US, Iceland and Russia — have purchased the RFP documents.

As per the cabinet decision of December 30, 2007, the DoED invited detailed proposals from firms or joint ventures as bidders for developing Budhi Gandaki Hydroelectric Project on Build, Own, Operate and Transfer (BOOT) model under Hydropower Development Policy, 2001.

“The fact that nobody has shown interest to invest in the Budhi Gandaki project is worrisome,” said an official at the Ministry of Water Resources. He said, “Nepal can generate thousands of megawatt of hydropower, but theoretical and practical obstacles have prevented national and international developers from generating power.”

According to him, political instability, changing opinions of leaders and policy makers, emergence of a federal identity, uncertainty of market and ritual protests are the reasons developers are not willing to invest in the hydropower sector.

“Many bidders do not want to be involved in the evacuation process and on top of it, the developers are still not convinced of the political leaders’ commitment,” he said.Deputy director general of the DoED Dibya Narayan Manandhar, however, said the bidders might be waiting for an appropriate time to file their RFP documents.

“We cannot say the situation is hopeless. Yes, the bidders in this project are not showing interest, but it may not reflect the scenario of the whole country,” he said.http://www.thehimalayantimes.com/fullstory.asp?filename=aCXatKsbrzqea7Ra0qa1HNamal&folder=aCXatK&Name=City&sImageFileName=&dtSiteDate=20080612